Monday 27 August 2001 12.00 EDT
First published on Monday 27 August 2001 12.00 EDT

Iain Duncan Smith's campaign for the Tory leadership suffered a damaging blow over race last night when it emerged that one of his most prominent supporters, the former party chairman Michael Ancram, failed to take action against a known racist while he was party chairman.

Amid fears in the Duncan Smith camp that they have been damaged by last week's revelations of a link with the British National party, a Tory anti-racist campaigner released a letter in which Mr Ancram said that no action should be taken against a BNP supporter who had infiltrated the Tories.

Stephen Parker, a Tory member in Hertfordshire, wrote to Mr Ancram in 1999 with evidence that a self-declared rightwing extremist had forged a Tory party membership card. But in a letter to Peter Lilley, Mr Parker's MP, the former chairman said in October 1999: "There is no further need to correspond with Mr Parker on this matter." Mr Ancram argued that Stuart Millson, a BNP member in his youth, had merely made a copy of a membership card.

Mr Ancram's refusal to take any action blew up in his face earlier this year when Mr Millson, who once dined in London with the French National Front leader Jean-Marie Le Pen, joined the Tonbridge and Malling Conservative association in Kent. He resigned in May this year after he was exposed by the Mirror.

The disclosure that Mr Ancram failed to take action to root out a known racist will confirm the fears of moderate Tories that the party hierarchy has been complacent about the far right's attempts to infiltrate the party. It will also embarrass Mr Duncan Smith who has won the support of Mr Ancram and whose leadership campaign was rocked last week when a prominent backer in Wales was unmasked as a BNP sympathiser.

Mr Duncan Smith insisted over the weekend that he would take immediate action against any extremists who attempt to infiltrate the party under his leadership. But the black Tory peer Lord Taylor of Warwick said yesterday that he was sceptical of the party's interest in tackling racism.

"Iain Duncan Smith was part of the leadership team who did absolutely nothing about racism. He was part of the leadership campaign responsible for William Hague's 'foreign land' speech. He is tainted by association."

Steve Norris, the former London mayoral candidate, said he hoped that right wingers would abandon the Tory party for the BNP or the United Kingdom Party (UKIP) if Mr Clarke becomes leader. But the UKIP Euro-MP Nigel Farage today says that he does not want extremists to join his party. In a letter to the Times he says: "We do not and will not accept members whom we know to have extreme views."

Mr Clarke will attempt to move on from the bitter row over race today when he attacks the government over its record on foot and mouth. During a tour of an agricultural show in Nottinghamshire, the former chancellor will say that the government has failed to appreciate the scale of the crisis .

His campaign suffered a setback yesterday, however, when an ICM poll for the Sunday Telegraph found that 76% of Conservative party members intended to vote for Mr Duncan Smith, against 24% for Mr Clarke. The Clarke camp dismissed the survey of 229 Conservatives, saying the only poll that counted was the one of 300,000 party members.

Mr Clarke was also forced on to the defensive over his links with British American Tobacco by the disclosure that he had been named in US court documents accusing the company of being involved in smuggling and organised crime. Lawyers in New York were said to be ready to send staff to London to interview BAT executives and collect files.